SaaS Interviews with CEOs, Startups, Founders
919 SaaS: A More Engaging Slack Passes $500 Customers, $7m Raised
29 Jan 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Brad Palmer.
He's the CEO and co-founder of a company called Jostle. He has more than 30 years of experience leading multidisciplinary teams and driving the commercialization of technology businesses. Brad loves helping organizations create extraordinary workplaces by putting people at the heart of it. Brad, are you ready to take us to the top?
I am. Good morning.
Good morning. All right. So tell us about Jostle. What's it do and what's your business model? How do you make money?
Jostle is a new kind of employee intranet, and we approach the problem differently than others. So we actually do connect everybody inside the company, help you drive your culture, help people connect, help people find expertise, help them get work done. It's a SaaS product, and people buy us on a subscription basis.
Okay, and just give us a sense of average customer. What do they pay you per month?
Our range of customer sizes is really broad. It actually matches U.S. company demographics. Average customer size is 275. Average contract value is around... 275 what, employees?
Employees, yeah. Okay, and what was ACV? Around 13. Okay, around 13, great. So about a grand a month almost? Yeah. Okay, great. And what are the, I mean, so when people hear kind of help team communication, I mean, they must think obviously of Slack. How are you different than Slack?
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Chapter 2: What is Jostle and how does it differ from Slack?
And then again, fast forward to today, what's your team size at? We're at 65 people. And where are you based? We're based in Vancouver. Everyone in Vancouver, very good. I hear good things about Vancouver.
Yeah, Vancouver's great.
Like property prices are going through the roof.
Yeah, it's a high cost of living, but it's got the benefits to pay for that.
And back to the company, what are you guys at now today in terms of total customers using you guys?
We're up around 500. One other very cool thing about Vancouver is it's super multi-ethnic. So we actually have employees from 24 different countries.
Wow, that's amazing. Okay, yeah, so super diverse, obviously Vancouver's team is 65, 500 customers. You said those are actual paying, right? Okay.
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Chapter 3: What is the business model and pricing structure of Jostle?
And you said earlier with a $13,000 ACV or about a grand per month, it sounds like you guys have probably passed that magical $500,000 MRR mark, right?
Oh yeah.
Yeah. That's great. Um, you said, Oh yeah. Like you're killing it. Are you above a million in MRR?
We have above a million in MRR. No, we're not.
Do you think you'll hit that by the end of the year?
Uh, we're approaching it nicely. Um, One other really interesting stat about us is measured across all our customers, and we have an incredible variety of customers in terms of management styles and kinds of companies, size of companies. We're hitting 85% employee participation measured across everyone, the good and the bad. 11% of our customers actually get 100% employee participation.
How do you know, how do you measure participation? Is it one login per week? Like what makes them active?
So those numbers are monthly numbers. It's somebody coming in and doing something useful. That's what we use from a marketing perspective because that's your best chance of finding something you can benchmark against too. It's a bit of a conspiracy in the industry. People don't normally mention those numbers because they're usually under 10%.
Most internets have less than 10% of their employees using them.
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Chapter 4: How did Jostle secure funding and what is its growth trajectory?
Older Business. Winning at New Products by Rother Cooper.
Winning at New Products, very good. Number two, is there a CEO you're following or studying right now? There isn't, no. Okay, number three, is there a favorite online tool that you have?
So after Tostle, definitely Trello.
Trello, okay. Number four, how many hours of sleep do you get every night? Six or seven. Okay, and what's your situation? Married, single, you have kids? Married, kids long gone. How many kids? New grads from yesterday. Congratulations, that's exciting. That's very cool. How many kids? I have two kids. Okay, and how old are you, Brad? I am 62. All right, last question. Take us back 42 years.
What do you wish your 20-year-old self knew?
So I think the thing is that once you've actually established a team, you've got a connected team around you, you don't have to get overly concerned about people bailing when times get tough. That's something I've learned a few times. When times get tough, people will rally around you and they'll stick with you and they'll pull you through
Often, young executives will get very paranoid about that and make bad decisions because they think people will not want to hear the news, best to sort of avoid engaging on it. I say head right in. They'll stick with you.
There you guys have it from Brad. Get the right people around you. Founded Jostle many years ago, back in 2009. Has since raised $7 million from friends, family, and wealthy angels. Has 500 customers paying him for his cloud-based internet software, helping teams communicate. They pay on average $13,000 per year, or about $1,100 a month. So they're well over $550,000 in monthly recurring revenue.
Less than 10% logo churn average. They have a very healthy payback period of less than 12 months and not spending, you know, relative to their revenue, not spending a ton on paid ads. It's about 75 grand per year with their team of 65 people up there in Vancouver. Brad, thank you for taking us to the top.
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